CBS: No Criminal Charges Likely in AIG Collapse

By GottaLaff

The the criminal case against the so-called "the Man who Crashed the World" has apparently "hit a brick wall." They can't prove that he lied about AIG's financial problems.

I've heard many a lawyer say that proving a lie is not easy. This proves that proving is not always prove-able.

Well, you know what I mean.

Why must brick walls so often get between us and the (alleged) thugs?

CBS NEWS has learned that former AIG executive Joseph Cassano - the prime focus of the investigation into its collapse - will meet with Department of Justice attorneys next week in what will likely be an end to the two year criminal investigation into the company.

Now back to the Tiger Woods coverage already in progress.

AIG Seeks Clearance For More Bonuses

By GottaLaff

I'd contribute a few bucks to those poor AIG execs, but I need the money for stuff like, you know, food and health insurance:

American International Group is preparing to pay millions of dollars more in bonuses to several dozen top corporate executives after an earlier round of payments four months ago set off a national furor.

The troubled insurance giant has been pressing the federal government to bless the payments in hopes of shielding itself from renewed public outrage.

The request puts the administration's new compensation czar on the spot by seeking his opinion about bonuses that were promised long before he took his post.

AIG doesn't actually need the permission of Kenneth R. Feinberg, who President Obama appointed last month to oversee the compensation of top executives at seven firms that have received large federal bailouts. But officials at AIG, whose federal rescue package stands at $180 billion, have been reluctant to move forward without political cover from the government. [...]

The payments coming due next week include $2.4 million in bonuses for about 40 high-ranking executives at AIG, according to administration documents from earlier this year. Though the actual sum may have changed since then, the payments are much smaller than those that caused the upheaval in March.

Still, officials at AIG and within the government see them as a land mine.

Gee, ya think?

H/t: Sam Seder

FOX (yes, Fox) Bags Trove Of Secret TARP Emails

By GottaLaff

This is getting good. Too bad it was Faux News that got the scoop. Via TPM:

...Fox Business News has obtained a much-redacted 10,096 pages of Treasury Department documents on the bank bailout. Scrubbed of "proprietary" information and what would presumably be their most explosive revelations, the communiques exchanged between the Bush Administration and executives at Citigroup and AIG read something like "Dumb and Dumber and I Know It Seems Impossible But Even Dumber Than That." The first role would be played by the TARP overseer and cheerleader for the Italian automobile industry Neel Kashkari, whose aides nervously emailed one another as they watched him testify before the House Financial Services Committee on what exactly he was doing with their money.

Nason: How's it going?

Zuccarelli: Bad. Serious questions, too, not "chump" type questions. They're going to start to break Neel down soon, I'm getting worried he's going to start snapping.

Nason: This AIG stuff is tough to watch.

Zuccarelli: They killed him on exec comp. He didn't know answer. [...]

But maybe because their $45 billion bailout was so puny compared to AIG's, Citigroup seemed most oblivious of all:

Though the details of what specifically held up an agreement with Citigroup at the end of last year are muddy, it's clear from the documents it dealt with compensation. What's also clear is that government officials were amazed that, even at the eleventh hour, Citi officials still didn't seem to understand that they would have to make concessions.

"Unbelievable," wrote Stephen Albrecht, the counselor to the general counsel at Treasury, summing up the situation.

There is more here. I felt too guilty to steal the entire post.

AIG Executive: We're Being Extorted!

By GottaLaff

Call the Keystone Kops!

AIG Financial Products chief Gerry Pasciucco told a meeting of his European based derivatives gurus that the money vortex CEO Ed Liddy's request that they return their bonuses amounted to "blackmail." That's according to a London-based recipient of one of the bonuses -- London, you'll recall, is where the inimitable Joseph Cassano was employed -- who furnished the news agency with emails showing that AIG compliance officer David Haig had actually asked the country's Serious Organised Crime Agency to probe whether the (voluntary) requests could be legally considered extortion. [...]

"The vast majority of people in London have made the decision that the request is pretty offensive," the employee said. "It effectively constitutes blackmail whether it is criminal or not. There is no moral reason to give it back."

Self-righteous indignation abounds. How dare anyone offend these moral highgrounders?! Harrumph! The very idea!

An insurance company doles out a couple hundred million dollars to hold on to employees who merely by leaving the company could, by some obscure provisions of the wholly unregulated contracts said company made with approximately 97% of financial institutions known to man, require -- by the Godly covenant of contract law -- said company to owe said banks more money than probably even exists in the world... and the federal government that was forced to buy the company to appease the banks lest they usher in Armageddon, makes a wholly voluntary request to said employees, $180 billion into its effort, to return their bonuses to appease taxpayers...and yes I suppose under that sort of a system such a request just might sound like "extortion." Legal or not.

You wanna talk offended? You wanna talk extortion? Dial 1-800-America.

VIDEO: Obama Hits the AIG Spot: Supernews animated snark

By GottaLaff

Since tonight will be jam-packed with serious stuff, here's some comic relief:

Despite AIG Bonus Fiasco, Obama Approval Stays High

Far cry from the crappy outlier Zogby that all the wingers are quoting.

For the first time since he became president, a new CBS News poll finds a significant number of Americans are expressing disapproval of President Obama's actions in a specific area: His handling of the AIG bonus situation. Just 41% approve of the president's actions while 42% disapprove.

Nonetheless, the president "continues to get high marks overall for his job performance and his handling of the economy."

President Obama's overall approval rating is 64% -- the same as it was a week earlier. His approval ratings for handling the economy are actually up five points to 61%.

A Gallup poll shows that of all the key players in the AIG bonus fiasco, only Obama "gets a more positive than negative evaluation."

Bracketology, AIG Style

From our snarky friends at The Full Ginsburg.

President Obama Pulls Back on Bonus Tax

I have no clue if this is good or bad. Your thoughts? Via Taegan-

President Obama "is no fan of bonuses paid at a financial institutions being kept afloat by taxpayer dollars but also says he would not 'govern out of anger' despite Americans' frustration with such perks," the AP reports.

"As he seeks lawmakers' support for his first budget, he took a political risk in signaling discomfort with a separate plan that slaps a punitive, 90 percent tax on bonuses paid to American International Group employees."

The Washington Post quotes Jared Bernstein, Vice President Joe Biden's chief economic adviser: "The president would be concerned that this bill may have some problems in going too far -- the House bill -- may go too far in terms of some legal issues, constitutional validity, using the tax code to surgically punish a small group of people."

Meanwhile, Politico reports a Senate bill to be considered this week "is less punitive, but could affect more companies receiving bailout funds. It would impose a 35 percent excise tax on the companies that paid bonuses and a 35 percent tax on the employees receiving them."

David Nather looks at the politics of the president not signing a bill.

"It's about power. How Wall Street insiders are using the bailout to stage a revolution"

By GottaLaff

Illustration by Victor Juhasz

Thanks to our friends at BuzzFlash, we get a link to another brutal gem by Matt Taibbi. Fasten your seatbelts:

It's over — we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire. [...]

[A]ll this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).

So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream. When Geithner announced the new $30 billion bailout, the party line was that poor AIG was just a victim of a lot of shitty luck — bad year for business, you know, what with the financial crisis and all. Edward Liddy, the company's CEO, actually compared it to catching a cold: "The marketplace is a pretty crummy place to be right now," he said. "When the world catches pneumonia, we get it too." [...]

He conveniently forgot to mention that AIG had spent more than a decade systematically scheming to evade U.S. and international regulators, or that one of the causes of its "pneumonia" was making colossal, world-sinking $500 billion bets with money it didn't have, in a toxic and completely unregulated derivatives market. [...]

People are pissed off about this financial crisis, and about this bailout, but they're not pissed off enough. The reality is that the worldwide economic meltdown and the bailout that followed were together a kind of revolution, a coup d'état. They cemented and formalized a political trend that has been snowballing for decades: the gradual takeover of the government by a small class of connected insiders, who used money to control elections, buy influence and systematically weaken financial regulations.

The crisis was the coup de grâce: Given virtually free rein over the economy, these same insiders first wrecked the financial world, then cunningly granted themselves nearly unlimited emergency powers to clean up their own mess. [...]

The mistake most people make in looking at the financial crisis is thinking of it in terms of money, a habit that might lead you to look at the unfolding mess as a huge bonus-killing downer for the Wall Street class. But if you look at it in purely Machiavellian terms, what you see is a colossal power grab that threatens to turn the federal government into a kind of giant Enron — a huge, impenetrable black box filled with self-dealing insiders whose scheme is the securing of individual profits at the expense of an ocean of unwitting involuntary shareholders, previously known as taxpayers.

Go read the rest here.

Obama's Katrina moment?

By GottaLaff

Frank Rich opines that this might be President Obama's Katrina moment unless he addresses the growing populist anger:

A charming visit with Jay Leno won’t fix it. A 90 percent tax on bankers’ bonuses won’t fix it. Firing Timothy Geithner won’t fix it. Unless and until Barack Obama addresses the full depth of Americans’ anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed. It would be foolish to dismiss as hyperbole the stark warning delivered by Paulette Altmaier of Cupertino, Calif., in a letter to the editor published by The Times last week: “President Obama may not realize it yet, but his Katrina moment has arrived.”

Six weeks ago I wrote in this space that the country’s surge of populist rage could devour the president’s best-laid plans, including the essential Act II of the bank rescue, if he didn’t get in front of it. The occasion then was the Tom Daschle firestorm. The White House seemed utterly blindsided by the public’s revulsion at the moneyed insiders’ culture illuminated by Daschle’s post-Senate career. Yet last week’s events suggest that the administration learned nothing from that brush with disaster.

Otherwise it never would have used Lawrence Summers, the chief economic adviser, as a messenger just as the A.I.G. rage was reaching a full boil last weekend. Summers is so tone-deaf that he makes Geithner seem like Bobby Kennedy. [...]

Since Americans get the big picture of this inequitable system, that grotesque reality dwarfs any fine print. [...]

[The] prominent players are just the handiest camera-ready triggers for the larger rage. Passions are now so hot that even Bernie Madoff’s crimes began to pale as we turned our attention to A.I.G.’s misdeeds, just as A.I.G. will fade when the next malefactor surfaces.

What made Jon Stewart’s takedown of Jim Cramer resonate was less his specific brief against CNBC’s cheerleading for bad stocks than his larger indictment of the gaping economic inequality that defined the bubble. As Stewart said, there were “two markets” — the long-term market that Americans earnestly thought would sustain their 401(k)’s, and the fast-moving, short-term “real market” in the back room where high-rolling insiders wagered “giant piles of money” and brought down everyone with them. [...]

But [the president's] rhetoric won’t tamp down the anger out there, and neither will calculated displays of presidential “outrage.” We must have governance to match the message.

To get ahead of the anger, Obama must do what he has repeatedly promised but not always done: make everything about his economic policies transparent and hold every player accountable. His administration must start actually answering the questions that officials like Geithner and Summers routinely duck.

Inquiring Americans have the right to know why it took six months for us to learn (some of) what A.I.G. did with our money. We need to understand why some of that money was used to bail out foreign banks. And why Goldman, which declared that its potential losses with A.I.G. were “immaterial,” nonetheless got the largest-known A.I.G. handout of taxpayers’ cash ($12.9 billion) while also receiving a TARP bailout. We need to be told why retention bonuses went to some 50 bankers who not only were in the toxic A.I.G. unit but who left despite the “retention” jackpots. We must be told why taxpayers have so little control of the bailed-out financial institutions that we now own some or most of. And where are the M.R.I.’s from those “stress tests” the Treasury Department is giving those banks? [...]

Another compelling question connects all of the above: why has there been so little transparency and so much evasiveness so far? The answer, I fear, is that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it. [...]

As the nation’s anger rose last week, the president took responsibility for what’s happening on his watch — more than he needed to, given the disaster he inherited. But in the credit mess, action must match words. To fall short would be to deliver us into the catastrophic hands of a Republican opposition whose only known economic program is to reject job-creating stimulus spending and root for Obama and, by extension, the country to fail. With all due deference to Ponzi schemers from Madoff to A.I.G., this would be the biggest outrage of them all.

He's Back...The Return of Elliot Spitzer

By GottaLaff

BuzzFlash Tweeted this link, and what a link it was! Seems Elliot Spitzer is becoming relevant again:

Elliot Spitzer is back and hes talking. The thought of this, no doubt, brings a small shiver to the boardrooms of some of the perps walking around trying to figure out how to hide the money this week. [...]

Plainly stated, Spitzer brings the AIG Ponzi Scheme one step closer to the revered establishment when he explains how the bailout money was funneled straight into the top players, with Goldman Sachs being the name that comes up again and again. [...]

Indeed, Goldman and AIG almost merged a few years ago, but Spitzer notes that the unknown black hole of AIG's business practices were probably what prevented it. Still, that didn't stop the incestuous dealings; it almost makes one think that this whole thing was a setup.

This is country that Spitzer is familiar with; he has been a terrible liability to entities that, under the Bush administration, were allowed to literally gut the country and its citizens. All of this seems to have been part of the Bush Administration's own Ponzi Scheme, which figured that the illusion of an ownership society, terrified of the "terraism" and steeped in the me, me, me, culture would look the other way while they finished clearing out the vault.

Spitzer has been fighting these guys and asking questions all along. Coincidentally, right after the WSJ editorial appeared on Valentine's Day 2008, Spitzer was caught up in what was an extremely unusual sting. So unusual is an investigation like this that it seems almost like it was a set-up; and considering where it all came from and how it all came down, it might well have been.

It seems that Spitzer's bank was investigating expenses under the auspices of the newer Homeland Security laws of the Bush administration. Greg Palast wrote about this compellingly, and in light of how the whole thing is shaking out now, and what Spitzer said back then about this financial mess and what he tried to DO about it, Palast had a pretty good early grasp on what had gone down. [...] We might all find ourselves wanting to thank the egotistical crime fighter who cant keep it in his pants.

I am no apologist for breaking the law, and usually its the highest and mightiest that fall the hardest. But when the mainstream is showing us the shiny object, we must resist the temptation to succumb to our base natures and try to see the bigger picture. There was never a real case against Elliot Spitzer, and no charges were filed. The release of embarrassing personal information was at the discretion of the Bush Administration's Justice Department.

Why was this information released? [...]

Palast:

Not all crimes lead to federal bust or even public exposure. It’s up to something called “prosecutorial discretion.”

Funny thing, this ‘discretion.’ For example, Senator David Vitter, Republican of Louisiana, paid Washington DC prostitutes to put him in diapers (ewww!), yet the Senator was not exposed by the US prosecutors busting the pimp-ring that pampered him.

Naming and shaming and ruining Spitzer – rarely done in these cases - was made at the ‘discretion’ of Bush’s Justice Department.

Or maybe we should say, 'indiscretion.'

Bush's Justice Department. [...]

Welcome back Elliot Spitzer. I hope we hear more from you very soon...your voice is needed in this matter.

David Shuster's Hypocrisy Watch: GOP Upset About Bonuses

I'm having vision issues tonight, so bear with me.

Report: Federal Reserve informed Treasury staffers of AIG bonuses earlier than Geithner claimed

By GottaLaff

I'm copying and pasting the entire post from Think Progress, with many thanks to them for such good reporting...

Secretary Krugman has such a nice ring to it:

Earlier this week, Treasury Secretary Timothy Geithner told congressional leaders that he did not learn of AIG’s plans to award $160 billion in retention bonuses to employees in its “troubled” financial products division until March 10. But as Time magazine reports today, the New York Federal Reserve “informed Treasury staff that the payments were imminent on February 28,” at least 10 days “before Treasury staffers say they first learned ‘full details’ of the bonus plan, and three days before the Administration launched a new $30 billion infusion of cash for AIG.” Time explains that “the fault [for the delay] appears to lie with career staffers at the department who failed to report the imminent bonus deadline up the chain to Geithner.”

What creates a bigger black eye: Firing Geithner or keeping him on?

Rep Cantor Can't Say How He'll Vote on AIG Bonus Taxing Bill

O'Donnell would not let up, and of course Scarborough had to demean him by belittling him about St Patrick's Day somehow. Scarborough is a huge bully.

Cartoon of the Day

Via.

AIG CEO Liddy speaks

By GottaLaff

Just now on the Tee Vee Machine:

"We're pretty much done with credit default swaps. [...] We did not have transparency. We did not have a good contract."

--AIG CEO Edward Liddy to House Financial Services subcommittee

Update Tweet from the Washington Independent:

Liddy Says Some AIG Employees Will Return Bonuses; Frank Threatens to Subpoena Names

VIDEO: President Obama answers questions about AIG

By GottaLaff

Visit msnbc.com for Breaking News, World News, and News about the Economy

Video has now been added, noted in the blog title. Now you'll be able to see all my mistakes. Snerk!

Liveblogging President Obama (excuse the shorthand, I caught what I could):
They represent an inappropriate use of taxpayer funds. But what's also outrageous is that we have to clean up after AIG's mess. I just met with my economic team and Barney Frank about a resolution authority similar, not identical, to powers that the FDIC has over banks... they can protect creditors, depositors, consumers, while also exercising greater power over institutions like AIG, not a bank an insurance company with a hedge fund, get out in front, separate bad assets from good, dealing with contracts that may be inappropriate...

My economic team will consult with the Hill, moving it on fast track... part of a package of regulatory steps in the future, so we won't be in terrible positions like this again.

People are outraged by the bonuses, but just as outrage is the culture the bonuses are a symptom of, excess greed, compensation, and risk taking have all made us vulnerable and left us holding the bag.

One message I want to send is as we get out of this crisis, I hope Wall St. and the marketplace don't think we can return to business as usual. The models that created paper wealth resulting in this crisis, can't be the model for economic growth going forward. We have to move beyond a bubble/bust mentality. Make investments on health care, energy, education... not just rely on the financial sector for all our growth. Hold executives more accountable.

Why were they making that much beforehand ? We strive to put an end to that culture.

We are exploring every possible avenue, as is Congress. We need tools, not just find ourselves with only two options: Withhold money from AIG, leading into a spiral that could affect our whole financial system... or, take bonuses and deal with them via the legal system [Sorry, didn't catch this accurately at all. Did that even make sense?].

Q: Do you wish you'd found out about the bonuses before Thursday?
A: Ultimately I'm responsible, as president of the United States. We have to clean up the mess. Nobody here drafted the contracts. or supervised AIG.. and allowing ourselves to put the economy at risk. But we ARE responsible, the buck stops with me. My goal is to never put ourselves in this position again.

Q: New round of bonuses coming up. How do you quell the anger?
A: I don't want to quell anger, they have a right to be angry. I'm angry. We should channel our anger in a constructive way. Stabilize the financial system, get credit flowing, and change how these businesses operate... so the taxpayers don't have to foot the bill when things go bad. There's a lot of folks feigning outrage about bonuses that a few years ago said we should never meddle in these compensation plans... My point consistently is that we believe in a free market, capitalism, getting rich... but based on performance.... It's appropriate to have regulations in place. We should not have the government step in any more... this requires some regulatory framework. Lesson: Putting smart regulations in place, oversight-- these are not anti-market, they're pro market.

You gotta be accountable to somebody. That measure of accountability is what made America strong, we've gotta get back to those values.

Q: You got $100 K from AIG. How do you feel today? Will you do something about it? Should Geithner resign?
A: I have complete confidence in Tim Geithner and my entire economic team. Geithner didn't create these contracts with AIG. Nobody's working harder than this guy. He's making all the right moves in terms of playing a bad hand. We need to provide him with support to work through these problems.

Q: Was it a mistake to prop up AIG?
A: This can get technical, but I'll try to simplfy: Last year when the Fed stepped in, it was not a decision that we made, but it was right... AIG had insured a bunch of losses for a bunch of banks that made bad bets on subprime loans.... Massive insurance policies, and a lack of regulations made it possible to have more policies than they could pay out... And had AIG been allowed to liquidate, all those banks would have experienced such big losses that it would threaten the entire financial system.

My answer is not protecting banks. It's protecting the American people. The prospect of all that unraveling would have been an unacceptable risk. We're trying to get into position where we make sure that going forward we're not held hostage to the bad decisions in the past, but create a system where they can't make these bad bets.

I am confident that we can strike the right balance [....] but don't allow them to put eveyrone's savings , homes, jobs at risk.

MSNBC Commentary: He didn't talk about what's happening now. He didn't look forward or back. Chris Matthews agrees: He shifted away from what did he know and when did he know it... the press let him get away with it, by the way... He's back to the change message, moving forward to causes of reform. Richard Wolffe: He's in touch with the anger mood, but he still has to educate us in how we got into this mess. Eugene Robinson: He was very lucid about AIG, took the heat off Geithner, saying the buck stops with me. He used the word "voters". He's very aware that he's there because he got elected.

Mike Viqueira: He and Barney Frank will go after them with litigation.

Cartoon of the Day

Via.

Liddy Congressional Grilling Open Thread

Holy crap, it's hard to believe that there is enough space in that room for all the feather preening going on. Gotta love Barney Franks though. He delivered a righteous smackdown to some schmuck who claimed there were never hearings before the first moneys went out. I'll put the vid up when I get it. You can stream the hearings here. Pic stolen from TPM.

Countdown - Professor Jonathan Turley - We made our own bed with AIG

Just highlights the complexity of this whole situation.